Recent Trends in Litigation: An In-House Counsel Perspective

Recent Trends in Litigation: An In-House Counsel Perspective

March 01, 2011

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We recently had the privilege of speaking with Frank Vecella, Associate General Counsel for Ericsson Inc. (the U.S. subsidiary of Swedish based Ericsson), who is responsible for Ericsson’s litigation matters, primarily in North America. Ericsson is an approximately 88,000 employee company operating in over 170 countries worldwide. Founded in 1876, Ericsson is the world’s largest manufacturer of telecommunications infrastructure equipment and related services. Mr. Vecella agreed to share some insights into recent trends in corporate litigation and his role in hiring outside counsel and third party consultants and experts.

Mr. Vecella joined Ericsson in January 2001. Since then, his role has included overseeing the litigation department that frequently deals with patent litigation, breach of contract and warranty claims, E-Discovery, antitrust and securities class action suits, determining who Ericsson will use for outside assistance (both law firms and experts) in litigation matters, and updating external auditors on a quarterly and annual basis on pending claims that could conceivably have a material impact on Ericsson’s financial reporting. Ericsson’s litigation docket is heavily weighted towards intellectual property issues, particularly patent infringement and related indemnification claims.

Mr. Vecella holds an undergraduate degree from Dartmouth College and a JD from the University of Virginia School of Law. Prior to joining Ericsson, he practiced law at a prominent law firm in Dallas, TX for nearly 18 years where he was the partner in charge of the litigation section of the Dallas office and the intellectual property section firm-wide. During his tenure at the firm, he focused primarily on commercial and insurance-related litigation and gained diverse experience on all types of trial matters, including First Amendment defense work, intellectual property litigation (including trademark, copyright, and trade secret disputes), breach of contract and deceptive trade practices cases, and wrongful death and other tort claims.

Stout Risius Ross (“Stout”): What are the biggest differences and the things you most like and dislike between private practice and in-house legal work?

Although it has been ten years since I made the transition to my present in-house position at Ericsson, I still miss many of my former colleagues from the law firm and the special bond that inevitably developed among the members of each trial team on which I was privileged to serve. The most attractive feature of the offer from Ericsson to transition to an in-house litigation management position was the chance to continue to experience the challenge and intellectual stimulation of a sophisticated litigation practice but without having to spend all my nights and weekends in the office. The fact that I ended up at such a great company as Ericsson, which has such a rich history and terrific corporate culture, was simply icing on the cake. I can truly say I have never once regretted my decision to make that move 10 years ago.

Another big difference between my former life in private practice and my present in-house role is that I no longer feel mired in the minutiae of every case. I used to be a bit of a micro-manager, always feeling I had to be in command of every little detail of every case that I was working on. My present responsibilities at Ericsson require me to be much more reliant on my staff and a much better delegator than I ever was at the firm. By necessity, I have become a “big picture” guy instead. I trust the other members of my team, including outside counsel, and no longer feel the need to be a perfectionist or to know every last little detail. I used to lie awake at night, tossing and turning, and making mental checklists of all the things I had to remember to do the next day. Now, when I leave my office in the evening, the work stays behind, and I am able to focus instead on my family and other outside interests.

Stout: You mentioned that you obviously need to trust both your in-house people and your outside counsel and experts. Does that tend to limit the number of outside people that you end up using on your litigation matters?

We use a number of different outside counsel and experts for a variety of reasons. I like to spread the work around to multiple firms, partly because I would never want to be stuck in the position in which there was only one outside litigation counsel who really understood our business and ways of working. Tomorrow, we could find ourselves with a new case on which that firm had a conflict, and then we would be stuck. I always like to have various options available to us. On the other hand, whenever a particular outside counsel does a great job for Ericsson, I certainly like to reward that success by offering him or her additional opportunities to work with us.

Stout: How do you build that trust with outside counsel and outside consultants and experts?

I generally do not hire outside counsel or consultants whom I do not know personally, so I spend lots and lots of time getting to know them, whether they are at firms that we already work with or simply firms that we might want to work with some day. Some of my colleagues marvel at my tolerance for going to receptions, CLEs, and meet-and-greets, but I feel it’s an important part of my job function to get to know these people. If I hear good things about a specific trial lawyer whom I have not met, I will often reach out to him or her to arrange an introduction. This has allowed me to get to know some exceptionally talented trial lawyers all across the country.

Stout: What role does the venue and location of your litigation play into who you might hire for outside assistance?

If we get sued in Milwaukee, I’m probably not going to hire one of the firms that we use on a regular basis here in Dallas to represent us in that case. I suppose some companies prefer to always use their one “go-to” firm, but I would rather find an attorney at a firm in that locale who knows the judge to whom the case has been assigned, has been in that judge’s court many times, knows his or her proclivities and idiosyncrasies, has earned a reputation for honesty and credibility with the judge, and also understands the local jury demographics.

Stout: Do you approach hiring experts and consultants in the same fashion, or do you typically rely on your counsel you trust to hire the right experts for these types of cases?

I typically rely pretty heavily on outside counsel for those decisions. When we have an especially important case with a lot at stake, I may want to sit in on the interviews with the prospective testifying experts, just to develop my own sense as to how well each candidate would be perceived on the witness stand. For the most part, though, I do trust my outside counsel to select the consultants and experts they deem most appropriate.

Stout: Do you ever make recommendations to outside counsel on experts to use or that you’ve worked with this expert before, he or she did a great job, and you may want to consider him/her?

Yes. All the time. There are also occasions on which we may be considering an expert, or maybe we have even retained an expert, to assist us on a case that has not yet come up for trial. If I happen to learn that that expert is about to testify in another matter, I will go down to the courthouse, sit in the peanut gallery, and watch and listen to him or her in order to make my own assessment as to how they handle themselves in trial. Then, I can make a much more informed decision as to whether we should hire them, or, in the case of an expert we have already hired, whether we should keep them. I often do the same thing when it comes to prospective litigation counsel.

Stout: Over the past ten years at Ericsson, what are some of the changing trends in litigation that you are seeing?

When I first joined the Company, we were a party to a number of patent infringement suits that had been asserted directly against Ericsson. In other words, we typically were the named defendant, or maybe one of several named defendants. From time to time, we still get involved in patent-related litigation. But nowadays, it more often than not consists of cases in which the patentee plaintiff has sued one or more of our customers, who in turn have asked us to assist and support them in defending the case. I personally have never been a fan of paying even “nuisance value” settlements just to get rid of frivolous claims. Consequently, we have taken a number of cases to trial even after all our co-defendants settled. I would like to think that our track record in that regard has something to do with the fact that we seem to get sued much less frequently these days than most of the other companies in our industry.

Stout: Does this phenomenon impact how you approach the litigation, and if so, how?

Absolutely. We try to do an early case assessment in each of our litigation matters. If it appears there may be some merit to the plaintiff’s claims, we are not averse to exploring some form of early dispute resolution process with the claimant before the parties have become entrenched in their respective positions and spent a ton of money on outside counsel, experts, etc. By the same token, however, if that early case assessment confirms that the plaintiff’s claims against us are weak, we will let the other side know up front that we are in it for the long haul. I would much rather pay outside counsel to win the case for us outright than to reward someone who has asserted a frivolous claim against us with a settlement check, however nominal it may be.

Stout: E-Discovery issues seem to be a growing concern for companies faced with litigation. What’s the first thing that comes to mind when I say “E-Discovery?”

“Major headache.” It’s especially challenging when you are managing litigation for a company that has over 88,000 employees working in 170 different countries. Often times, the individuals who may have custody of potentially relevant data work and reside in countries outside the U.S. and thus are not sensitized to our broad discovery rules and relatively litigious society. Here in the U.S., of course, every document that gets created can conceivably be used against us in a court of law. This is an entirely foreign concept to many of our employees whose own countries have little or no litigation and even less allowable discovery. The liberal discovery rules under which we operate here in the U.S. can create some interesting challenges for a truly global company like Ericsson, not only from a collection and preservation standpoint, but also in terms of educating our workforce about the do’s and don’ts of what I sometimes refer to as “e-mail etiquette.” We do the best we can to properly educate and train our employees with the limited resources available to us.

Stout: Have you had any issues with any of the new federal
rules on electronic discovery, in the form of additional litigation or court rulings?

To the best of my recollection, we have never really had any major problems in that regard, or even been accused of having failed to comply with our discovery obligations (knock on wood). Needless to say, litigation can become very contentious. One of the ways I try to keep that to a minimum, though, is by the choices I make when hiring outside counsel to represent us. I want someone who will stand his ground and not back down, obviously. But first and foremost, I always try to hire lawyers who are honest and ethical, reasonable, what I call “straight shooters.” By doing that, we usually are able to set a tone and forge a relationship of collegiality and professionalism with opposing counsel, right from the start, and this usually translates into few, if any, discovery squabbles.

Stout: We have started to see a trend towards alternative billing arrangements in litigation. What have you seen in the way of these arrangements at Ericsson?

I am a big believer in thinking outside the box and not feeling that just because it has always been done one way, it cannot be done another. Consequently, I am always willing to explore with outside counsel the feasibility of various alternative billing arrangements. Having said that, however, I have to confess that I have not seen too many arrangements that I thought made more sense for our company than the traditional “hourly billing rate plus expenses” model that I grew up with in private practice. I’ve had a number of law firms that proposed offering us a blended rate for everyone who might work on our case, be it a senior partner or a junior associate. We experimented with that approach one time. Well, guess what? It turned out that 95% of the work was being done by the youngest associate on the team, and trying to get the lead partner to focus on our case was like pulling teeth. I have also seen flat fee per month arrangements that have not worked out so well either. So, I guess you could say I’m a little skeptical of alternative fee arrangements in general. I have always wanted to try a reverse contingency fee arrangement in one of our defense cases, but the types of litigation matters that we usually encounter rarely lend themselves to any type of formula that our company and the law firm could both get sufficiently comfortable with at the outset of the case.

Stout: We have also noticed a trend towards arbitration as opposed to litigation. Do you have any thoughts on the benefits or drawbacks of each?

I’m not a big fan of arbitration, personally. We often have arbitration clauses in our contracts, and many of my Ericsson colleagues in other parts of the world seem to think that arbitration is always preferable to litigation. Based on my own experience, however, I have not found arbitration to necessarily be any faster, cheaper, or more predictable than entrusting our fate to a judge and jury. I especially do not like the fact that most arbitrations are final and non-appealable. We have had one or two cases in which I felt the arbitrators got it very wrong, and then we were stuck with a bad result. By contrast, at least here in the U.S., we have achieved success, either at the trial level or on appeal, in virtually every case that went the litigation route instead. If you get a bad result in court, and you think the judge or jury happened to get it wrong, at least there is an avenue of redress with the appellate remedy.

Even when it comes to representing a large multi-national corporation such as Ericsson, I usually do not feel we are at a big disadvantage by having to try our case to a jury. I think jurors do a phenomenal job of reaching the correct result most of the time. If a jury were to find against us, and we felt it was because we happen to be a big multi-national company, we probably would have no one to blame but ourselves for not doing a very good job at trial. Oh, one other pet peeve about arbitration: I have never met an arbitrator who thought any piece of evidence, however trivial or prejudicial, was irrelevant or inadmissible; so everything comes in. It makes me really appreciate the important gatekeeper function that judges perform in our jury trial system.

Conclusion

Litigation continues to evolve with forms of alternative dispute resolution, compliance with discovery rules, changes in the production of electronically stored information, and knowing who to trust and hire as outside counsel and experts. These issues are even larger for multi-national corporations like Ericsson. Mr. Vecella highlights the importance of knowing the many issues to consider for all types of litigation, whether it is high stakes, precedent setting cases, or a small employment matter. Knowing your venue, the subject matter experts, who have the right experience and expertise in such matters, and who is the best lawyer in that geographical location, help in-house counsel identify the most qualified individual to handle each matter.